• Home
  • About
  • Subscribe
  • LATIF
  • Conferences
  • Dashboard
  • Edit My Profile
  • Log In
  • Logout
  • Register
  • Edit this post

Room 151

  • 151 BRIEF

    What's New?

  • Inflation ‘biggest concern for LGPS professionals’

    May 20, 2022

  • LGA calls for government support as regulators face staffing issues

    May 19, 2022

  • WMCA signs £4bn investment agreement with L&G

    May 18, 2022

  • Bill will give UK Infrastructure Bank power to lend directly to councils

    May 18, 2022

  • £400bn pension group collaborates on climate transition initiative

    May 17, 2022

  • CIPFA rejects proposal for vote on publication of fraud hub report

    May 17, 2022

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews
  • Briefs

Business rates multiplier reform will cost local government £80bn

0
  • by Colin Marrs
  • in Funding
  • — 2 Feb, 2017

Photo: Skeeze / Pixabay CC0

Government proposals to change the way increases in business rates are calculated will take £80bn out of local government coffers over 20 years, MPs have heard.

Guy Ware, director of finance, performance and procurement at London Councils, made the claim during the first day of the committee stage of the Local Government Finance Bill.

The Bill includes a clause which would change the annual uprating of the “business rates multiplier” to use the consumer price index (CPI), rather than the current retail price index (RPI) measure of inflation.

Giving evidence before the committee, Ware said: “That change alone will take £80bn of spending power out of local government over 20 years.

“At a time when we are discussing a crisis of funding in social care and that being a good third of local government funding, to reduce by fiat the capacity and buoyancy of the biggest single tax that local government is collecting seems to be worthy of debate, shall I say.”

The proposal to change the business rate multiplier calculation is being made in response to campaigning by business representative groups.

In 2013, the British Retail Consortium ran a campaign called Fair Rates for Retail, urging the government not to increase the multiplier for 2013-14, and suggesting the use of the CPI in future.

The 2016 Budget committed the government to replacing the use of RPI with the CPI.

In 2011, the Office for Budget responsibility said that it expected the long-term rise in RPI to be around 1.4% lower than CPI inflation, which includes housing costs.

Also appearing before the committee, Nick Forbes, leader of Newcastle City Council and vice chair of the Local Government Association, and Jon Collins, leader of Nottingham council and vice chair of Core Cities, both described the social care funding system as being in “crisis”.

Forbes told MPs: “I don’t know anyone in DCLG who thinks that the funding for social care is anything other than a solution to get us through the next few months.”

This directly contradicted the view of local government minister Marcus Jones, who had earlier on told the committee: “I don’t agree it is a crisis. I agree there are significant challenges in the system and we are putting forward measures to support local government. We recognise the challenges and are looking to address those.”

Both Forbes and Collins also said that the move by government to calculate funding for local authorities based on spending power, rather than need, had introduced more unfairness into the system.

Collins said the shift “benefits rural areas and big counties at expense of big cites. We are seeing a shift of resources to relatively well-off authorities in the south east.”

Also appearing during the session, Graham Soulsby, managing director at Kettering Borough Council and finance lead for the District Councils Network, said that the government needs to take with the resetting of business rates redistribution baselines.

He said: “It could provide a disincentive to economic growth as you move towards that reset. If you did it in year four out of five, you won’t keep much of the extra growth because it will be redistributed.

“We have tried to argue that for that to work properly, there needs to be some retention of incentive in the medium term so that if you want to use some of the additional business rate income, you can go out to the market and perhaps get infrastructure funding to promote some bigger schemes, but you would have to pay it back over a longer period of time.”

And David Borrow, deputy leader of Lancashire County Council and finance spokesman for the County Councils Network, warned the government against adopting a system of regional redistribution, mooted by the Independent Commission on Local Government Finance in 2014.

Borrow said: “All that would do is reinforce the inequality between regions. It is fundamental that if you want to get a fair local government finance system you have to have equalisation across the country.

“On a mathematical basis you can argue it is easier on regional basis, but it will reinforce poverty in the North East and affluence in the South East.”

Get the Room151 Newsletter

Share

You may also like...

  • Investors ‘potentially damaging housing business models’, MOTB attendees told 28th Mar, 2022
  • Councils & carbon: COP26 an opportunity to confront climate change at a local level 28th Oct, 2021
  • Richard Harbord: What will happen with business rates? 30th Nov, 2021
  • Reforming business rates payments for schools 19th Apr, 2021

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 24 mins ago

    Investing today: nowhere to hide: Partner Content: Alex Stanley from Ardea Investment Management suggests that investors have few places to hide amid a synchronised sell-off in both bonds and equities. However, there are catalysts that[...] dlvr.it/SQlNVC pic.twitter.com/KkGGnduzPL

    Room151 21 hours ago

    Treasury to restrict PWLB loans to councils at risk of non-repayment: The Treasury has released new guidance that restricts local authorities’ access to Public Works Loan Board (PWLB) advances if there is a “more than negligible risk” of a council’s… dlvr.it/SQhLTV pic.twitter.com/vBsS7xMJdb

    Room151 21 hours ago

    Mixed reaction to proposed government intervention powers: There has been a mixed reaction to the government’s legislative plans to strengthen its intervention powers over local authority finances. The Levelling Up and Regeneration Bill has proposed… dlvr.it/SQhLMB pic.twitter.com/50foWxpPGs

    Room151 22 hours ago

    Post-Brexit struggles for national and local government regulators. @LGAcomms @NAOorguk Click the link below to read 🔻🔻 room151.co.uk/brief/lga-call… #Brexit #government pic.twitter.com/s3c8ySGy5G

    Room151 1 day ago

    CIPFA: a question of transparency: Roman Haluszczak’s campaign for publication of the independent report into the collapse of CIPFA’s London Counter Fraud Hub has been rejected again by the institute. He is now calling for[...] dlvr.it/SQgC5V pic.twitter.com/08fWsHFF4g

    Room151 2 days ago

    Back to the future for the PWLB: The Public Works Loan Board is tightening its lending criteria to ensure that loans will be repaid by local government borrowers. But, asks Peter Findlay, shouldn’t they have been doing[...] dlvr.it/SQcmmm pic.twitter.com/bVv4fe0Xlv

    Room151 2 days ago

    Great piece from Peter Findlay on the PWLB’s tightening of its lending criteria. He raises some pointed questions for the Treasury and explains why the ‘casino council’ characterisation was simplistic and inaccurate. #PWLB #localgov room151.co.uk/treasury/back-…

    Room151 2 days ago

    The Queen's speech highlighted the need for accelerating UK infrastructure investment into levelling up projects and cutting emissions. @UKInfraBank #QueensSpeech #ClimateAction #emissions Click the link below to read 🔻🔻 room151.co.uk/brief/bill-wil… pic.twitter.com/hFmF2veVIa

    Room151 2 days ago

    Huge funding heading to the @WestMids_CA from @landg. @andy4wm #LevellingUp #netzero #regeneration Click the link below to read 🔻🔻 room151.co.uk/brief/wmca-sig… pic.twitter.com/ajhZhia6mx

    Room151 2 days ago

    LGPS governance, Cagney and Lacey style: What regulatory response can be expected following the publication of the Good Governance project’s Phase 3 report and the closure of the Single Code of Practice consultation? Susan Black offers[...] dlvr.it/SQbfXf pic.twitter.com/xwqHOEu2AP

    Room151 3 days ago

    More evidence of the importance of emerging markets in the journey to net-zero. @BordertoCoast @BrunelPP @northernlgps @EAPensionFund @WYPF_LGPS Click the link below to read 🔻🔻 #LGPS #NetZero #NetZeroCarbon #EmergingMarkets room151.co.uk/brief/400bn-pe… pic.twitter.com/qCm0EGxzLn

    Room151 1 week ago

    ‘Urgent consultation’ issued in response to continuing audit delays: CIPFA and the Local Authority Scotland Accounts Advisory Committee (LASAAC) have announced another “urgent consultation” to consider proposals to address the latest issue that has led… dlvr.it/SQJ0kV pic.twitter.com/s6vw0bnGXO

    Room151 1 week ago

    Bags of capacity – now to housing delivery: HRAs have been freed up and councils are starting to invest, but some remain cautious, writes Steve Partridge. He suggests that a minimum of £10bn of additional borrowing could be[...] dlvr.it/SQDvxk pic.twitter.com/yZmoWzHv6U

  • Categories

    • 151 News
    • Agent 151
    • Audit
    • Blogs
    • Business rates
    • Chris Buss
    • Cllr John Clancy
    • Council tax
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Education
    • Forum
    • Funding
    • Governance
    • Graham Liddell
    • Housing
    • Ian O'Donnell
    • Infrastructure
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • Levelling up
    • LGPS
    • Mark Finnegan
    • Net Zero
    • Private markets
    • Recent Posts
    • Regulation
    • Resources
    • Responsible investing
    • Richard Harbord
    • Risk management
    • Social care
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Transport
    • Treasury
    • Uncategorized
    • William Bourne
  • Archives

    • 2022
    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Daniel Godfrey: LGPS and the cost of active management
  • Next story Enfield set to make millions from new energy company

© Copyright 2022 Room 151. Typegrid Theme by WPBandit.

0 shares